Question

A principal of $2200 is invested at 8.5% Interest, compounded annually. How much will the investment be worth after 13 years?

Answer 1

To calculate the compound interest of an investment, we shall use the following formula;

`A=P(1+r)^t`

Where the variables are;

`\begin{gathered} A=\text{amount after 13 years} \\ P=\text{Initial amount invested} \\ r=\text{rate of interest} \\ t=\text{time (in years)} \end{gathered}`

With the information available, we can calculate the amount of this investment after 13 years as follows;

`\begin{gathered} A=2200(1+0.085)^(13) \\ A=2200(1.085)^(13) \\ A=2200*2.8879 \\ A=6353.38 \end{gathered}`

ANSWER:

The investment after 13 years would be worth $6,353.38